Accounting Business Reporting for Decision Making

376 Accounting: Business Reporting for Decision Making

Horizontal analysis

Balance sheet items (in %) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Efficiency ratios 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Days inventory 65.61 33.58 35.59 35.22 33.59 30.11 57.29 49.45 55.65 69.29

Payables period 33.01 16.16 15.44 16.74 18.51 15.57 24.98 22.5 30.33 29.45

Receivables turnover 38.44 41.58 38.49 37.52 36.75 33.63 32.55 37.33 33.95 30.49

Inventory turnover 5.56 10.87 10.25 10.36 10.87 12.12 6.37 7.38 6.56 5.27

Fixed assets turnover 3.08 3.71 3.84 3.77 3.64 3.55 3.56 4.32 4.9 5.31

Asset turnover 1.62 1.75 1.86 1.96 1.93 1.89 1.74 1.79 1.7 1.71

Source: © Morningstar, Inc 2013, Starbucks Corporation SBUX — Key ratios, http://financials.morningstar.com. All rights
reserved. Reproduced with permission.

Decision-making activities

8.48 The Qantas Group integrates a sustainability report with its annual report. Locate the most recent

sustainability report to address the following questions. The reports can be located at http://www.qantas.

com.au. (Hint: Click on About Qantas, then Investors.)

a. Discuss how the Qantas Group defines sustainability.

b. List the key sustainability issues identified by the Qantas Group.

c. Qantas selects its sustainability report ‘content and key performance measures... on the basis of

materiality, stakeholder interest and guidance provided by the leading sustainability framework,

the Global Reporting Initiative (GRI) G3 Sustainability Reporting Guidelines... The metrics

align with the Qantas Group’s overall business strategy’. Define and critique five sustainability

statistics reported by the Qantas Group.

d. The Qantas Group presents sustainability information and statistics for the benefit of a wide

range of stakeholders. Identify the stakeholder groups that would find this information relevant.

e. Select three stakeholder groups and identify the sustainability ratios that they would be particu-

larly interested in. Discuss what the trend in these ratios suggests about the Qantas Group’s

performance in these areas.

f. You are an accounting graduate employed by a manufacturing company. Your boss, the Chief Finan-

cial Officer, has been requested by the board to include information in the annual report in accord-

ance with the Global Reporting Initiative. Your boss does not know about this reporting framework

and has requested you to prepare a discussion paper summarising the GRI and its benefits.

8.49 Debt collection companies Credit Corp Group and Collection House have reported uplifts in

revenue and profits for 2015 suggesting that the debt collection market is flourishing.

Speaking about Credit Corp Group’s results, chief executive officer Thomas Beregi noted that

the lending business was driving growth, with the traditional business of buying debt ledgers

remaining stable. The company’s loan book has grown from $63 million to $100 million and its

share price closed at $13.21 — significantly higher than the $4 it traded at in 2011.

Collection House’s results reflect its growth strategy based upon growing purchased debt ledger

collections and investment in systems and analytics to improve the quality of such purchased debt

ledgers. The return on this investment is evidenced by the annualised cash recovery yield being

more than 40 per cent higher than in the corresponding two-year period.

Sources: Richardson, T 2015, ‘Are the results of Collection House Limited a strong buy sign?’, http://www.fool.com.au,

11 February; and Main, A 2015, ‘Debt collector Credit Corp Group lifts revenues and profit’, The Australian, 5 August.

(continued)